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Jewish World Review June 19, 2000 /16 Sivan, 5760

Paul Greenberg

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Them are us: Why the death tax is dying -- WHO SAYS AMERICANS are no longer interested in tax cuts? How else explain the bipartisan vote in the U.S. House of Representatives to kill -- not just reduce, but eliminate -- the estate tax? Such a vote would have been unimaginable only a few years ago, like so many things before the watershed congressional elections of 1994.

The margin in the House was overwhelming, though probably not veto-proof: 279 to 136. Sixty-five Democrats crossed the aisle to vote with the Republican majority to carry the day.

What a difference a name makes. So long as Americans thought of this tax on death as an estate tax, it seemed unassailable. Only the rich have estates, don't they? But change the name to a death tax, and everything else changes. The unfairness of it dawns:

Tax what a family has striven to acquire over a lifetime, and make the government the principal heir? Look at the family farms that must be sold, the family businesses that must be broken up, the commercial and more-than-commercial institutions (like newspapers) that have to be sold as the IRS arrives right after the Grim Reaper. Or maybe before.

Speak of a death tax, and things get deadly clear. Once again, vocabulary is revealed as the Little Round Top of politics -- the commanding height that dominates the battle. He who controls it may control public opinion.

Perhaps the most effective ad campaign against the estate tax showed a cemetery full of tombstones, with one reading: Family Business. Suddenly everybody understood. This issue involves real jobs, not just abstract, sentimental principles like equity or tradition.

Not that sentiment is missing from this debate; what would an American debate be without an appeal to the emotions? The most popular argument against the death tax is that it threatens the family farm or business. If the same estate is invested in stocks and bonds -- that is, in a variety of American farms or businesses -- support for repealing the tax evaporates. It's not very logical, or fair, but neither is American politics.

Our Jeffersonian bias in favor of the rural is showing, and so is our attachment to some kinds of property over others: the family business over just plain business. But the death tax ought to be repealed because it is unfair to families in general, not just those who have built up only certain kinds of assets.

It won't be easy to do away with a tax that has become a mainstay of whole, massive industries-tax lawyers, tax accountants, tax collectors, tax-and-spend politicians. ... Some of the sharpest, most creative and ingenious minds of every generation are now employed either beating or buttressing this death tax. There ought to be a more productive use for all that talent.

The Internal Revenue Code, that encylopedic monstrosity, continues to absorb not just estates, but any number of our best and brightest. But light begins to dawn. Where there's death, there's hope.

We will always have with us those whose only approach to wealth, or at least others' wealth, is to expropriate it. Even now, their fog machines are at work confusing the issue, as well as any taxes they can-estate, income, capital gains. ... But the confusions they sow begin to lift as more Americans catch on to the basic principles at work in the estate tax: envy, complexity, and waste.

The most effective thing the death tax does is discourage enterprise and investment, which create jobs and wealth, and encourage consumption. "In other words,'' to quote one economist, "it makes more tax-planning sense to buy vacations in Colorado or a painting by Rubens than to invest in new production equipment or expand a business.`

Speaking of those whose estates could be taxed to death, one congressman warned: "The death tax is a natural-born killer of everything that they have worked for their entire lives. This isn't a rich-against-the-poor issue. This is a jobs issue and a fairness issue.''

But it used to be a rich-against-the-poor issue -- until so many American acquired a taxable estate, or at least hoped to. A better name than either estate tax or death tax for this kind of levy might be an "envy tax.'' It's never been the amount of money the estate tax brought in (less than 1 percent of federal revenues) that made it untouchable, but that it soaked the rich.

So long as most of us weren't rich, or didn't expect to be, it was unchallengeable -- another third rail of American politics nobody would dare to touch. Like the Social Security system. Until folks started raising questions about it. And about how little they stood to gain from their investment in it.

So long as the death tax affected only others, others one envied anyway, it was easy to support and even call it fairness. But as the economy grew, and Americans prospered, and class lines began to wither, so did class politics. Class war never did have the hold on Americans than it long has had on Europeans, anyway.

Of course Bill Clinton, with his immediate McGovernite instincts, is against repealing the tax. For now. Wait till he notices the sea change that has been going on in American public opinion as more and more Americans begin to think of capitalists not as Them but as Us. Then this New Democrat will become even Newer. It's hard to imagine our Baby Boomer-in-chief not getting out in front of this reform soon. Even now, his party's class instincts grow weaker every year. To quote the AP story on the vote to repeal this tax:

"Although repeal is a top GOP priority, co-sponsors included many black and Hispanic Democrats and liberals not normally allied with such tax cuts. They agreed the tax was causing headaches for members of minority groups and other middle-income entrepreneurs who are taking advantage of the booming economy to build successful enterprises and create jobs.''

It's an American thing: Here wealth is not a function of ethnicity. Nor, contrary to all the stereotypes, is poverty. But can the Democratic Party stand prosperity? It can and it will. It already is coming to terms with the country's growing refusal to be bound by old class lines, and the old political reflexes they produced.

Even the founder of the party, Thomas Jefferson, could proclaim in his inaugural: "We are all Republicans -- we are all Fepublicans.'' Now, as the politics of consensus and convergence works its magical way this election year, we are all Republicans, we are all Democrats.

Al Gore is even now working on his own version of George Bush's proposal to let Americans set aside some of their wages for investment in private retirement accounts. And the Democrats in Congress have their own, me-too version of the repeal of the death tax, one even a Charles Rangel can support. Repealing the tax, the congressman from New York now says, "is a good concept.'' He may not sound enthusiastic, but he can recognize an idea whose time is coming.

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©2000, Los Angeles Times Syndicate